Replies to This Discussion

Permalink Reply by Skip Peel - Mineral Consultant on November 8, 2018 at 11:07

San Saba Royalty is a reputable company.

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Permalink Reply by Skip Peel - Mineral Consultant on November 9, 2018 at 3:08

The company's means of identifying interested buyers is fair game for criticism but it is not illegal nor is it unethical in my opinion.  In the case of my clients, San Saba has, in most cases, made offers closer to my opinion of fair market value than most mineral companies and they are professional in their due diligence and closings.

When considering the sale of mineral rights or royalty, it is always a good idea to seek offers from two or more companies.  Always require those companies to provide a firm offer in writing and avoid getting into a back and forth dollar negotiation with someone whose approach is to see how low they can push the price.  Be sure to perform background research on the company if possible and have an experienced O&G attorney review any written agreement.

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Permalink Reply by Andy Laskey on November 9, 2018 at 8:10

What is the play here by these companies. I don't receive much today in royalties, is there a long term play that I am missing or are they just trying to increase their influence by increasing their ownership?

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Permalink Reply by Skip Peel - Mineral Consultant on November 9, 2018 at 8:40

Andy, I can't speak for San Saba.  There are many acquisition strategies and targets employed by mineral companies.  A strategy for the LA Haynesville Shale could be based on one or more areas based on a perception of rock quality.  Could be an investor buying under a certain operating company or companies drilling units.  Could be attempting to buy where the public record indicates new wells will be drilled in the future.  It could be avoiding certain areas or operating companies.  Mineral companies typically spread their acquisitions out over multiple play areas or scattered across one play.  Of course they hope to realize revenue from royalty payments or to build a portfolio that can be sold at a profit.  In the early days of the Haynesville Shale acquisitions were a crap shoot and many purchases turned out to be in areas that were not economic or didn't have any Haynesville reserves at all.  Ten years in there is a much greater amount of data that is valuable in deciding where to buy.  There are still no guarantees as to the timing of future wells.

I'm unsure concerning your comment regarding "trying to increase their influence".  Where mineral companies buy minerals covered by an existing lease, there is no influence beyond the terms of the O&G lease that burdens those minerals.  If a company is buying unleased mineral rights in areas not yet developed there may be some moderate influence on development if they have sufficient or key acreage.

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Permalink Reply by Lynne Davis on November 11, 2018 at 3:11

They are always sending us checks for huge amounts. I write void across them and keep for future reference.

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Permalink Reply by Skip Peel - Mineral Consultant on November 11, 2018 at 3:31

Lynne, just to be clear.  San Saba sends you checks?  That would be a surprise as I have never seen that before.  I have copies of letters from several companies that are unprofessional at best but have never seen one from San Saba.  In the past there were a couple of companies, Cobra and Southwestern, that sent out deliberately misleading letters with an attached check.  This was so blatant that it was fraudulent to many in the legal community.   I worked with some attorney's to help get a law passed which prohibited the practice in Louisiana and provided a lengthy rescission period for a seller to cancel the sale and get their money back.  Offer letters are one thing, sending a check and the usual accompanying power of attorney/mineral deed is now illegal or at least can be canceled should someone fall for it.

I invite anyone who has been taken advantage of by such a scam to contact me and I will refer them to a law firm that, depending on the specific circumstance, may take a case pro bono simply to have the chance to punish companies or individuals who have taken advantage of someone with this approach.

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Permalink Reply by Skip Peel - Mineral Consultant on November 11, 2018 at 5:10

Thanks for the information, Kathy.  It may be that San Saba does that in Texas but not in Louisiana and that's why I have yet to see one.  Interesting comment by the landman.  I suggest that you ask what company would be drilling the wells.  If it is an operator seeking to acquire some minerals and they were willing to make a drilling commitment, I might sell a portion particularly if there is no current activity in the area.  Otherwise I'd stand pat.

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Permalink Reply by Skip Peel - Mineral Consultant on November 11, 2018 at 5:55

Kathy, if you are any other GHS member have a San Saba letter as described with an attached check, I would very much appreciate a copy for my file. Please contact me on my personal page and I'll let you know how to send it.

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Permalink Reply by Skip Peel - Mineral Consultant on November 11, 2018 at 6:45

Thanks, Kathy.

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Permalink Reply by Phillip Ware on November 16, 2018 at 11:42

Sorry Mr. Peel, just saw your message to Kathy S.  As much as you have helped people on this website for years, I will happily send you a copy of mine, if you wish. 

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Permalink Reply by Skip Peel - Mineral Consultant on November 16, 2018 at 11:52

Thank you, Phillip.

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Permalink Reply by Phillip Ware on November 16, 2018 at 11:37

Good Evening,

Just to keep folks informed, I received a "bank draft" from San Saba Royalty Company.  Offered $6,400 for 0.000997 net interest in Ironosa (San Augustine Co.).  Seems like a fair price considering the last royalty check was for $10.

Just over 60% of the Production Sharing Agreements were signed and I received a call from a landman, so I'm thinking San Saba is accumulating interests in anticipation that the "extended lateral" well will be drilled in the near term.  Anticipated production increase justifies the offer? Why wouldn't Aethon be willing to pay something for the Production Sharing Agreement? 

Later!

 

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